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The Noise just got louder

 

Last Friday 10/10/14, I wrote about “Rising above the noise” that has been increasing volatility and pushing equity markets down.

Well that “noise” just got louder.  The noise today (10/15/14) was a second Dallas healthcare worker confirmed to have contracted the Ebola virus and economic reports out of Europe, specifically Germany, pointing toward declining economic growth.  This noise caused a massive flight out of risk assets (equities) and into safe-haven assets (mostly US Treasuries) during the early part of the day. 

However, not all the “noise” was bad.  At 2pm Eastern time on 10/15/14 the Federal Reserve released its Beige Book,  a summary of economic activity and conditions across the 12 Federal Reserve Districts in the US.  Essentially, the Fed found that economic growth was continuing at a modest to moderate pace across the US. Here is a link to a CNBC report that summarizes it well: http://www.cnbc.com/id/102090888  This report was received positively by the market as between 2pm EST and the market close at 4pm EST  the S&P 500 rebounded from a low of 1820.66 to close at 1862.49 (source: Yahoo Finance)

So far the “noise” has drowned out the start of 3rd quarter 2014 corporate earnings season.  While we have only had a handful of earnings reports, so far most have been better than forecast with companies such as Alcoa, Johnson & Johnson, Intel, American Express and Netflix all beating estimated earnings per share.  See this CNBC report on earnings surprises:    http://www.cnbc.com/id/18080780

I remain convinced we are experiencing a normal correction in an otherwise healthy market. I believe that corporate earnings will continue to be better than expected and that fact will stop the fall in equity prices. I am looking for the equity market to rebound back to the 2,000 area on the S&P 500 by the end of the year.  However, I remain vigilant in monitoring economic and financial conditions for any signs that would necessitate a change in approach.

Please call me if you have any questions or concerns.

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

 

 

 

Debit cards vs. Credit cards

 

You have likely seen the news about Target and their customer debit and credit card information being hacked.  The link below is to a good article explaining how consumer credit protections apply to debit card versus credit cards.  I hope you find it helpful.

 

http://money.cnn.com/2013/12/20/pf/expert/debit-credit-cards/index.html?iid=HP_LN

 

Feel free to contact me if you have any questions!

 

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

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Five Tax DON'Ts before year-end 2013

 

Here is a link to a checklist of tax tips to consider before the end of 2013 (source: SEI Private Trust). There is still time to potentially reduce your tax bill for 2013.  I wanted to share it with you because some of these tips may apply to you.  I will be discussing these strategies with my clients over the next couple of weeks.

 

https://ig.cdn.responsys.net/i4/responsysimages/seic/__RS_CP__/ADV_1309_WN_FiveTaxDonts.pdf

 

Please feel free to call me if you have any questions on the tips or if I can be of assistance to you in any way.

 

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

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November is Long-Term Care Awareness Month

 

November 12, 2013

From the American Association for Long-Term Care Insurance -November is Long-Term Care Awareness Month.  Even the U.S. Congress has urged "the people of the United States to recognize (this) as an opportunity to learn more about the potential risks and costs … and the options available."   AARP reports that the lifetime possibility of a 65 year old becoming ADL (activities of daily living) disabled or cognitively impaired  is 44% for men and 72% for women.  I’m proud to support this important educational campaign.

Smart reasons to think about long-term care as part of your overall financial plan.

You protect against other risks like a car accident or house fire.  A need for long-term care is a risk to your savings and to your retirement.  It will impact your family and loved ones.   Just as it is smart to plan ahead for retirement, it's smart to plan now for long-term care.  Here are some things you should know: 

Buy before age 65; avoid the high cost of waiting.  Your age and your health are important factors that determine the cost of long-term care insurance protection.   Costs are based on your age at application and go up each year.  By waiting to purchase until you are closer to retirement you might find it's just too expensive to buy this important protection.??    

At younger ages you can lock in good health special savings.  Your good health today can help you 'lock in' preferred health discounts that won't change even if your health does. If you currently have a health condition it's especially important?to find out if you can health-qualify before it may get worse.  ??     

Discounts can help significantly reduce the cost.  I believe you will be surprised by how affordable long-term care insurance protection?can be for some of the newer plans suited for people your age.  Today, there are ways to reduce the cost of long-term care insurance; savings available when you plan ahead.??

The first step is in your hands.?Getting the information you need to make an informed decision is always a smart move. 

Waiting is never advantageous. 

I encourage you to take this first step.  Call me at 973-771-5120.  Let me tell you what long-term care protection costs for someone your age.

Make Long-Term Care Awareness Month the time you start planning.  Please pass this reminder along to anyone who you feel should be thinking about Long-Term Care.

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

 

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

 

 

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UPDATE - Government Shutdown and Debt Ceiling

October 17, 2013

As you have probably heard by now the folks in Washington DC did what they do best – wait until the very last minute and then just extend the deadline. Basically they have reopened the government until mid-January 2014 and increased the debt ceiling until mid-February 2014. The reason for the mid-January 2014 date is to try to force a budget agreement (the US hasn’t had an actual budget in over 5 years) before the next round of mandatory budget cuts as part of the sequester that was implemented back in the summer of 2011 (the last time we faced this same situation). The structure of the agreement also allows the Treasury Department to continue to use “extraordinary measures” which will likely extend the debt ceiling beyond mid-February. (note: technically the debt ceiling was hit back on 5/19/13 but these “extraordinary measures” allowed the Treasury to operate until 10/17/13)

Since last Thursday,  a relief rally has occurred in the equity markets.  However, I wouldn’t be surprised to see a “buy the rumor, sell the news” pullback now that a deal has been struck.

So now the financial markets will again focus on truly important things like economic growth and corporate earnings.  On the economic front, the 16-day government shutdown is estimated to have cost the US economy $24 billion as per Standard & Poor’s.  However, on a Gross Domestic Product of almost $16 Trillion that is fairly insignificant.  What is more important is the damage this episode has caused to sentiment and confidence, especially among consumers. Third quarter 2013 earnings season started last week and so far earnings results have been mixed, with some important companies like American Express & Verizon beating estimates and some like IBM & Goldman Sachs missing estimates.  My sense is that earnings overall may be somewhat disappointing.

In summary, I feel that we will likely see a pullback in the equity markets on the order of 5% to 10% near-term but then a move higher into year-end.   On the fixed income front I expect interest rates (basis US 10yr Treasury) to remain in the 2.4% - 3.0% range for the foreseeable future.

I hope you find this update useful.  Please feel free to call me with any questions or concerns.

 

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Health and other non-variable insurance products are not offered through Wall Street Financial Group.

 

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

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October 16, 2013

Financial Fitness for Women

Don’t let the title fool you – this article should be read by both women and men.  Too often I meet women and men who do not share & collaborate in managing their finances.  According to a Securities Industry Association study in 2006, only 54% of couples handle financial decisions jointly,  with women making decisions alone 21% of the time and men deciding alone 25% of the time.

Here are some thought provoking facts:

Women earned about 80% as much as men in 2011[1]; the life expectancy of a 40 year old woman is about 42 years, while a 40 year old male’s is about 38 years[2];  44% of women aged 65 and older are widows[3], and 70% of nursing home residents are women.[4]  Women are also more likely to be the caregivers for their family.

For all these reasons, a majority of women will spend many years having to manage finances on their own. Today, every woman – single or married – needs to plan for personal and family security. A strong financial future begins with a sound financial plan.  Husbands should want a financial plan to help the family carry on in the event of either spouse’s death.

The first step in creating a sound financial plan is establishing your goals.  Your goals should be specific but also realistic.  I generally recommend breaking goals down into short-term (1 to 3 years), mid-term (3-10 years), and long-term (10+ years).  In order to determine the action steps to meet your goals you first need to understand your current cash flow.  The best way to do this is to create a budget by looking at all sources of income and all expenses.  I suggest doing this monthly for at least a three month period to capture all recurring and non-monthly items.  You should try to capture cash expenses as well, because those daily latte’s can really add up! You may be surprised by the results.

Once you know your net cash flow the next priority is to build an adequate emergency fund, which should be kept separate from your regular checking/savings account.  Three to six months of expenses is usually adequate depending on the source(s) of your income. 

Most folks think about the expected – like buying a home, retirement, or paying for education. A good financial plan includes guarding against uncertainties such as a death, disability, or medical situation.  This next step is a review of current health, life, disability and liability coverage. Having the right types and amounts of insurance provides protection against events that could jeopardize family income and assets. Most folks are not fond of insurance but my experience is that it doesn’t make sense to risk a lot to save a little.

The next step is to look at growing your assets.  This involves understanding risks, anticipating inflation, allocating your assets and diversifying your investments. Understanding the tax implications of your investments should not be overlooked.  Investment planning is a broad subject that I will cover in a future column.

Estate planning should also be a part of your plan. Everyone has an estate, regardless of how much money they have or what they own.  You should have a will, which directs the “who, what, and when” of the disposition of your assets after death.  A Power of Attorney and a health care proxy / living will allows a trusted person(s) to manage your financial/legal affairs and health care in case of incapacity.

One thing to consider is whether to seek help.  There are good reasons to seek professional financial advice, just as there are good reasons for consulting a doctor when you need medical care. Working with a trusted advisor may mean the difference between achieving your goals or having to change your standard of living.  A good advisor will provide clear explanations, treat you respectfully and work as an equal partner with you.

Remember knowledge = power, so the more you know about your current financial situation the more power you will have to succeed.

Come back next month when I will share some ideas on how to manage debt.

 

McCarthy Wealth Solutions, LLC and Wall Street Financial Group, Inc. are separate entities. They are independently owned and operated. Only securities and advisory services offered through Wall Street Financial Group, Inc. Registered Investment Advisor. Member FINRA/SIPC.

Information herein is taken from sources deemed reliable and WSFG is not responsible for any errors that might occur.  All opinions expressed are those of the author and not necessarily those of WSFG. Health and other non-variable insurance products are not offered through WSFG.

 

[1] Institute for Women’s Policy Research, 2011

[2] National Vital Statistics, 2012

[3] US Census Bureau, 2005

[4] Institute for Women’s Policy Research. 2011

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May 29, 2013

Education Planning

May 29 (5/29) is National 529 College Savings Plan Awareness Day. This annual day celebrates the importance of preparing for future college expenses and the advantages of 529 College Savings Plans.

529 plans offer a simple, affordable way to save for rising, higher education costs. These investment accounts allow tax-free growth and withdrawals of earnings for qualified, post-secondary expenses. Qualified expenses generally include tuition, room and board, books, supplies, and computer technology while attending an eligible educational institution.

You can establish a 529 account sponsored by any state. Pick the plan that best suits your investment objectives. Compare fees, minimum initial and future investment amounts, age-based portfolios, and selection of individual funds for building your own portfolio. Some 529 plans allow automatic investments from a bank account with a minimum investment as low as $25.

As the account owner, you remain in control of investment selections and designated beneficiaries. Grandparents, other family members, and friends can establish a separate 529 plan for any child or make cash contributions (no stock, bonds, etc.) directly to an existing 529 plan. Contributions make great holiday or birthday gifts.

There is nothing quite like a grandchild to reawaken hope, and will us to dream of a future full of possibility and wonder.- Anonymous

Investing early and regularly in a child’s life may yield a favorable account balance when your child attends college. A monthly investment of $50 starting at a child’s birth could grow to about $20,000 by age 18, assuming a 7% investment return. This hypothetical example should be considered relative to rising college costs.

I didn’t start early enough for my girls and it made paying for their college education a heavier lift. I have already started 529s for my grandchildren so that doesn’t happen again.

According to The College Board, the average cost for an in-state, on-campus student attending a public four-year college for the 2011-12 academic year was $21,447 versus $42,224 for a private college. Using a 6% college inflation rate, these costs grow to approximately $61,000 and $121,000 per year, respectively, for a newborn graduating at age 17. Your ability to pay some or all of your child’s college expenses will depend on your family’s cash flow and overall financial goals.

Something to think about!

Although the information included in this report has been obtained from sources we believe to be reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.